Taiwan’s well-known, successful economic growth during the past three decades has largely been attributable to the development of export-oriented, labor-intensive industries. Taiwan’s abundant labor force has played the key role in this process. Since the mid-1970s, however, increasing domestic wage rates relative to other industrializing countries, in addition to a resurgence of worldwide protectionism, have jeopardized the position of these labor-intensive industries. Presently, the economy of Taiwan is moving away from its reliance on labor-intensive industries towards the rapid development of capital- and technology-intensive industries. The speed at which this transformation is effected will be partly determined by the broad labor-supply trends in Taiwan during the forthcoming decade.
In this paper, the quantity and quality of the labor supply and the structural changes that have occurred during the past two decades are analyzed. A forecast is also presented of labor supply trends over the next fifteen years (1981-1996). This analysis is then compared with the labor supply situations in seven other countries – Hong Kong, Japan, the Philippines, Singapore, South Korea, Thailand, and the United States.
The growth rates of the labor forces of all eight countries will be lower during 1981-1996 than that during the preceding two decades. Taiwan’s labor-force growth rate should be roughly equal to Hong Kong’s, but lower than that of the Philippines, South Korea, and Thailand.
Calculation of the enrollment-ratio index for the six Asian developing countries included in the study offers some interesting findings. In the following decade, the ratio of new entrants into the labor force with a junior high school education or above will be lower in Taiwan than in South Korea. Also the ratio of new entrants with a higher education (Junior and technical colleges, university, or above) in Taiwan might be lower than in the Philippines and also, several years later, lower than in South Korea, providing South Korea maintains its high growth rate of higher education enrollment. These figures point to a gradual lessening in the qualitative superiority (measured by several factors: age structure, education, composition of industries, occupation, and status) of the labor force in Taiwan vis-a-vis the other Asian developing countries in the next decade.
The contribution of education to labor force improvement cannot be overestimated. Based on the student-teacher-ratio index, the quality of primary and secondary education in Taiwan has improved during the last decade, but the quality of higher education has diminished a little. Even so, the quality of education, at every level, in Taiwan remains somewhat better than that of the Philippines and South Korea, but not as good as the education provided in Singapore. All six Asian developing countries plan in the years ahead to expend most of their energies and funds in expanding technical education, especially in the engineering fields.
The study concludes with the exhortation that the government must continue to set policies which reduce reliance on labor-intensive industries, enhance further the quality of the overall labor force, improve education at each level, and attract overseas Chinese and students to come back to work in the Republic of China.
